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25/09/2013
Feature: Terminal-Centric Systems have landed

 

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Terminal-Centric Systems: linking TOS with WMS to integrate the supply chain

Today, the flow of goods is moving towards pivotal change. Driving this evolution are major advances in terminal-centric systems integration that enable marine and inland cargo terminals to connect seamlessly into warehousing and the hinterland supply chain. Put simply, it’s the inter-connection of portside cargo terminal operating systems (TOS) to DC-side warehouse management systems (WMS) and their related business systems.

It’s transformative stuff – advances that will leverage the profitability, performance and efficiency not just of terminals, transshipment operations and warehousing – but also the mutually reliant supply chain networks that comprise the entire logistics equation.

So, a quick reminder of how the land lies. “The nation is just nine meals from anarchy,” said Lord Cameron of Hillington in 2007. “Anarchy” is probably a little melodramatic … but it goes to show the central nature of the supply chain in what society today takes for granted. Whether it’s for food, white goods or other cargo, the Just-in-Time networks that deliver what we consume run to fine margins.

There are many pressures at work …

  • On the supply side: to increase efficiency and productivity
  • On the demand side: to lower costs, broaden availability and accelerate fulfillment
  • On the economic side: consumer confidence remains fragile and tentative
  • On the operational side: protect cash flow, lower costs, boost profitability and enhance competitive edge in tough trading conditions.

Today, our intermodal systems are irreversibly driven by technology and the timely exchange of the right information. The question is: how can that technology engine respond to these pressures and take the supply chain to the next level?

Introducing the ‘Woodward Potential’ ...

Think back to Sydney in November 2003 - and that knife-edge world cup final thriller. When later asked how England got their hands on the Webb Ellis trophy, Sir Clive Woodward tellingly observed: “winning was not about doing one thing 100% better, but about doing 100 things 1% better”. Think about that for a second. As a strategy for succeeding in a high-pressure sport that has many moving parts … plus multiple, interdependent roles and requirements, it’s so simple that it’s brilliant. And it worked.

Sir Clive’s comment perfectly sums up a practical – and necessary – vision for the future of our intermodal systems - and technology’s role in it. We now have the integration, functionality, real-time visibility and connectivity capabilities to do many things incrementally better … so that we create a supply chain where the whole really is greater than the sum of its parts – while also lowering our need for new materials and energy.

At base level, the single most important element is the requirements of the cargo inside those containers – where, when, to whom and in what quantity. Technology can now future-proof that process – not just at each physical point of the container handling equation but throughout the wider supply chain right to the point of product delivery or purchase.

The impact of integration on performance ...

Now look at the supply chain equation. Coastal terminals and inland terminals are usually vertically aligned – they talk well to themselves via the terminal operating system but are rarely integrated from that TOS into the wider supply chain.

The situation is better balanced for distribution centres and warehouses. National DC and warehouse networks are usually integrated horizontally with their operators and end-users - either via strategic WMS or ERP systems, where information management improves and optimises planning, scheduling and decision-making. It’s no surprise therefore that JIT has developed as a distribution-side discipline.

This is where we typically find the big supply chain gap – between the container terminal and that wider distribution network. In that gap exists the ‘Woodward Potential’: leveraging technology to improve incrementally a number of processes that combined, will reduce costs, shorten timelines, improve efficiency, boost visibility, deliver seamless traceability, enhance customer service … and sharpen competitive edge.

Welcome to Distributed System Management ...

DSM module

Taken as whole it’s about software-led, integrated relationships between port authorities, port terminal operators, inland terminal operators and the transport and logistics links connecting them that will deliver the next generation supply chain. We call this Distributed System Management – DSM: the integration of terminal operating systems with supply chain warehouse management systems. DSM enables authorised users to connect and view product status at both terminal and warehouse level via a single browser interface. DSM users have secure and controlled access to relevant operational data all the way through the supply chain.

The result of this integration is four-fold:

  • Visibility of warehouse transshipment capacity to terminal operators
  • Visibility of terminal cargo to warehouse operators
  • Visibility of product in the warehouse to customers/end-users
  • Enabling all parties to improve the way they plan operational resources, manage traceability and execute deliveries

In many ways it is simply the logical next step from where we are today. Indeed such change is already beginning to manifest itself physically as logistics parks begin to gravitate towards the port or inland terminal estate. Just think of the way DP World London Gateway at Thurrock has been laid out.

DSM in action ...

How might DSM integration across terminal operating system and warehouse management system cascade business benefits? For the sake of scenario, let’s take imports. EDI and Internet messaging pre-advises inbound cargo quantities, types and transshipment instructions.

With no manual data entry, human error is managed out of the handling equation and easy-to-select cargo storage zoning and input strategies within the TOS ensure receipt of container cargo into the terminal is fast and efficient.

The optimisation functions in the TOS then makes the requisite container moves automatically and in real-time. By selectively integrating warehouse and terminal operating data with real-time DSM, terminal operators can now assess supply chain transshipment demands for the next few days – to great accuracy and based on live, real-world information.

On-site differential GPS-based container and MHE tracking maintains a precision live picture of exactly where cargo and assets are at any given time, enabling the TOS to trigger appropriate messaging to the warehouse. Because DSM connects warehouse to terminal, the warehouse operator can do the same: each party can access relevant data from the other.

One can then move containers out of long-term storage, ‘hotbox’ them in anticipation of pending transshipment and allocate labour and mechanical handling equipment accordingly.

Sharing data with the TOS, the warehouse WMS can do the same, allocating storage, prepping resources for goods arrival while also being able to schedule collection and delivery sooner and with greater precision. The warehouse – and this could be on-site, near-site or at a DC anywhere in the country – records a clear cargo status of “in transit/waiting arrival”, keeping container cargo visible in the supply chain at all times.

Optical character recognition automates the gatehouse functions at the terminal and directs the truck to the warehouse. Because both TOS and WMS are sharing information for cargo handling, this optimises gatehouse operations for receipt at the warehousing end with cargo arrival pre-advice.

The benefits ...

There’s a clear and consolidated range of benefits here - simply through the judicious, real-time sharing of the right information to authorised third parties – with easy access, tailored reporting to match. At the terminal, container optimisation, labour and resource allocation becomes based on real-time demand and capacity direct from the distribution side. Think about what that means for payroll efficiencies. And the warehouse can see  - again in real-time – what’s arriving and when.

Importantly, the warehouse also knows when the container leaves, as soon as it leaves – there’s no in-transit gap. At all times there is full cargo visibility – in transit, on MHE, in storage, at the gatehouse and at the bay door – and a digital audit trail that starts from the very first contact point.

The difference? The whole supply chain becomes live and in real-time at every point. The results? Optimised space allocation; optimised labour, optimised MHE deployment, optimised lifts and optimised dwell times – plus faster container transshipment into the supply chain, faster goods delivery to the customer or end-user and precision resource planning. Let’s quantify it. We estimate that a DSM application will cut goods-in handling times by around 15% - and therefore deliver a commensurate improvement in throughput volumes. Couple this improvement with automated activity charging and one can generate more revenue at lower cost and a higher profit margin.

The opportunity for Inland co-location ...

That’s a compelling argument for DSM integration … which is the software infrastructure that underpins the co-location of inland container railheads and warehousing. From a company perspective, we’re already operating end-to-end DSM for Deutsche Bahn at Port of Szczecin in Poland. It’s a tri-modal operation comprising the port, rail terminal and 12 warehouses on-site. Controlling multiple cargo types as well as people and MHE, we are managing operations across container yard and warehouse, fully integrated for optimised operation.

Closer to home, think about the current DIRFT II and the planned DIRFT III at Daventry – ultimately over 500 acres of rail-connected warehousing handling container cargo and side-loaded palletized rail freight. It’s a short jump to see that a DSM-style application integrating TOS with WMS has the potential to make operational life significantly easier for 3PLs and the client businesses using such facilities.

Which brings us onto the opportunity for rail-connected distribution parks generally. It’s broad EU and UK government policy to divert freight onto more sustainable platforms – rail, short sea and inland waterways – and UK rail freight tonne/km has grown 70% since market liberalisation in 1994.

Let’s take a look at the figures. According to the Office of Rail Regulation and other industry sources ...

  • Total UK rail freight lifted in 2012 was around 113 million tonnes, recovering from the recessionary dip
  • Forecasts suggest this could rise to an annualized 168 million tones by 2030.
  • 40% of new warehousing build – around 9 million square metres - is forecast to contribute 30 million tones of that increase via co-location, saving around 1 million tonnes of CO2 per year.
  • Other forecasts speculate that a potential increase in oil prices over the same period to around $175 per barrel could add a further 50 million tonnes of rail freight to that total in a significant re-balancing shift from road to rail.

Based on such projections, warehousing and intermodal terminal co-location has a firm foundation for steady and consistent growth that will demand integrated DSM-style approaches to managing the technology infrastructure that powers it.

The times they are a-changin' ...

The core business of the marine container port relies on its hinterland transshipment links and facilities - road, rail, river and inland terminals. To re-emphasise a key point: in an increasingly competitive terminals sector, the single most important element is the supply chain requirements of the cargo inside those containers. Future-proofing that process requires an integrated software methodology for control, visibility and traceability.

While Internet-led comms networks provide the information connectivity, it is strategic cargo management software that underpins that control, visibility and traceability in the supply chain - at the dockside, at the inland terminal, in the distribution centre and in the warehouse. Our job – as systems integrators and information engineers – is to stitch these elements together to drive new efficiencies into the supply chain so that terminals and supply chain businesses can capitalise on this new opportunity.

In the Internet age, it’s web-enabled and TOS-led management that sits at the heart of delivering the responsive operational improvements that drive enhanced profitability and sharper competitive edge … not to mention higher throughput, accurate stack management, lower truck turn and faster gate-to-gate times.

Plus there’s precision activity charging that ensures terminal operators get paid for the productive moves made. Flexible resource management that dovetails with daily demand and optimised container handling on-site that reduces the associated costs of emissions, fuel consumption, machine run hours … and even tyre wear on MHE.

But it’s not just about terminals connecting into supply chains as they stand today. A DSM-style technology backbone enables marine and inland terminal operators to diversify into true terminal-centric logistics. From attracting 3PL or manufacturer-led logistics operations onto the terminal estate – and connecting to them – right through to establishing or outsourcing co-located logistics services. Whichever way one cuts it, it’s a new revenue stream that sweats estate assets and helps maximise return on investment plus stakeholder and shareholder value.

Terminal management software and warehouse management systems are no longer simply a subsidiary IT issue. While they can never be allowed to dictate how a business operates, this much is true: these systems are now as central to the success of the business as the people it employs and the customers it relies on.

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